Celgene (
CELG
) has been giving investors good news lately, after a long
stretch of giving them heartburn.
The biotech earlier this month reported positive trial results
for its immunology drug candidate apremilast, one of
several Celgene is hoping will fill out a portfolio still
dominated by its blockbuster cancer drug Revlimid.
The results came from three late-stage studies Celgene is
conducting that test apremilast on psoriatic arthritis sufferers.
The company already reported good results from one of them in
July, and the other two showed similar improvements in symptoms
and physical functions among subjects.
Celgene plans to file an application for approval with the FDA
in early 2013, and in Europe in the second half of the year. It's
also investigating the use of apremilast for other immunological
disorders such as ankylosing spondylitis (a type of spinal
arthritis) and a rare syndrome called Behcet's disease.
But all these conditions are considered to be among the
"smaller indications" for apremilast, says Morningstar analyst
Karen Andersen. The bigger prizes are psoriasis and rheumatoid
arthritis, two markets already inhabited by some of the world's
top-selling drugs, includingAbbott Laboratories ' (
ABT
) Humira,Johnson & Johnson 's (
JNJ
) Remicade andAmgen 's (
AMGN
) Enbrel.
Clinical Trials
Celgene is conducting clinical trials testing apremilast on
these diseases, but they aren't as far along as the psoriatic
arthritis trials. Andersen said if all goes well, it could make
$1 billion a year by 2020, but she offers only a 50-50 chance of
that happening.
ISI Group analyst Mark Schoenebaum said in his weekly
videocast to clients Sept. 7 that he also had low expectations
for apremilast, but he's starting to "turn the corner" on the
drug.
"Even if you aim towards the low end of expectations, this has
the potential to be a pretty big drug," he said. "And I've had
some conversations with the CFO of the company, and I no longer
think this will require a giant marketing expense."
However, both analysts said the data so far released have been
sketchy. The full report will be made at the American College of
Rheumatology's annual meeting in November, which will give them a
better idea of the potential market.
The positive news on apremilast lifted Celgene's stock, which
since April has suffered a series of body blows. First-quarter
earnings missed analysts' expectations for the third straight
time, sending shares on a long-term slide. But the biggest hit
came in June, when the company withdrew its application for a new
Revlimid indication in Europe.
Celgene's goal was to expand Revlimid's use in the complex
treatment of the blood cancer multiple myeloma. Normally, it
begins with doctors taking a group of blood-producing stem cells
from the patient's body, which are then stored and put back into
the patient after a round of chemotherapy. Celgene has been
pushing for Revlimid's use as a maintenance therapy after this
point, regardless of whether the patient relapses.
In the U.S., it's already used at various stages of treatment
because of doctors' relative freedom to prescribe drugs for
"off-label" uses. The European authorities are a lot more
stringent about these things, so Celgene and the European
Medicines Agency have been in a long wrangle over the drug's
safety profile. A small number of patients in the trials
developed second cancers, believed to have been caused by
exposure to Revlimid.
Though the idea of a cancer-causing cancer drug might sound
odd, it wasn't a total shock since the traditional myeloma
treatment, thalidomide (which Celgene also makes), has long been
known to increase the risk of cancer. The important question is
whether the risk of this is great enough to outweigh the known
benefits against the original cancer.
A year ago, a panel advising the EMA determined that the
risk-benefit profile was positive. But that determination was
about Revlimid in its current use, not for maintenance. The EMA's
Committee for Medicinal Products for Human Use (
CHMP
) was apparently still concerned about the effects of longer-term
use because when Celgene withdrew its application on June 21, it
said it would "resubmit with more mature data, which allows CHMP
to conclude a clear benefit/risk ratio."
More Time
Cowen analyst Eric Schmidt told IBD in July, "I think also the
agency wants to see the trends favoring overall survival persist
with time, that they're not causing early mortalities. We don't
know if it'll be another six, 12 or 18 months, but if data mature
in a fashion that seems acceptable, they can probably get back on
track."
Meanwhile, Celgene is working to expand its hematology
franchise. Vidaza, a drug treating a blood disorder called
myelodysplastic syndrome, was first approved in the U.S. in 2004,
but is still expanding into new markets globally. In the second
quarter of this year, its sales rose 24% over the year-ago
quarter.
Celgene is also developing another multiple myeloma drug
called pomalidomide, which is currently in phase-three testing
for treating refractory cases that haven't responded to other
treatments.
Analysts say that Celgene isn't expecting it to turn into the
next Revlimid, but they do expect it to do well.
"I think that's another billion-dollar drug, and it's more
likely (than apremilast) to make it to market," Andersen told
IBD.
Despite its stock troubles, Celgene has remained a solid
growth company, with double-digit quarterly increases in both
profit and sales for many years. Still, the forecasts show why
Celgene is looking for new revenue streams. Analysts expect
profit this year to rise 28% to $4.87 a share, but see growth
easing to 13% next year.